Education

More than 400 homes later…

Bob Lawrence retires…shares tips
 
Bob Lawrence started building homes in 1973, just two years after Oregon formed the Construction Contractors Board (CCB) to regulate the industry. He retired recently and closed his Tigard-based business, Pacific Homes.
 
“It’s been a good run with over 400 homes built, and no CCB complaints,” he said in a note to the CCB.
 
So we tracked him down by phone in Hawaii for a few more tidbits. He noted that the economics of homebuilding have changed dramatically in the last 35 years. 
 
In 1973, he built an entire 1,417-square foot single-level home in Southwest Portland, including the $5,000 lot, for a total $25,000. He sold it for $32,000. On the last house he built in Tigard more than 35 years later, building permits and sewer/water connections alone cost about $25,000. The lot was valued at about $200,000, and the home at nearly $600,000.
 
“It takes a substantial amount of capital to operate as a home builder today,” he said.  Back when he was starting out, he and his original partner, Bob Glover, saved $13,000 each, bought a lot from Tualatin Development Company and built their first house out of pocket. 
 
On their first trip to the Benjamin Franklin Savings & Loan, just to introduce themselves and get information, they walked away with a loan application. The relationship with Benjamin Franklin continued for many years.
 
Lawrence supported regulation and the CCB from the start. The agency helps keep things “on the up and up,” he said.  The insurance, bonding and education requirements benefit both the public and the industry, he said.
 
What tips might he pass on to newer contractors?
Join the local Home Builders Association: The contacts he made – from designers and architects to bankers, suppliers, contractors, and real estate brokers – helped build a team. Being a member of a trade association and being licensed properly also “gives the new people some legitimacy.”
 
Carry the CCB license and workers’ compensation insurance if you have employees: “You’re not on par with a real experienced contractor but you’re a leg up on the itinerant, unlicensed types.”
 
Deal with issues up front and openly: Bare the issues that homeowners and builders may not be comfortable bringing up. Change orders are a good example. He usually collects the additional cost of routine change orders up front. For example, if the customer changes the kitchen cabinets, incurring an additional $5,000 worth of costs, he would typically write up an order and collect the money so there was no misunderstanding about the cost. “Changes and change orders are probably the biggest headache and one of the biggest sources of lawsuits in the construction industry.”
 
Develop a detailed contract: Lawrence has a business degree from OSU. His contract mixed boiler plate with attorney advice. He suggests a contract you’re comfortable with that’s easy for a customer to understand. The agreement should be backed up with complete building plans and again with easy-to- understand, detailed specifications. “It kept us out of trouble,” he said.

Treat your subcontractors decently: “We were never a builder that went out to try to beat the subs down to get the absolute lowest prices,” he said. In fact, they took pride in making sure the subcontractors could make money. How did they put together a good building team?  “A lot of it is networking,” he said.
 
That means spending time at the lumber yard finding out who pays their bills, and who is out on the jobs. It means asking the electricians about good plumbers and plumbers about good electricians. “Pretty soon you get a group, the group all knows each other,” he said.  Of course, being a builder who is organized and lines up jobs on time is important. “Subs want to work with builders they trust that will pay their bills,” he said.
 
Run your business like a business: Maintain good records, job cost controls, current accounting, and pay your bills on time.

“In building a home, if you do a good job, you have the rare opportunity to physically create something that will positively impact the lives of people far into the future - people you may never meet,” Lawrence said.  “It was a good career.”
 
 

ENFORCMENT

Tips on contracts

Enforcement Manager Stan Jessup
We all know the law requires a written contract for work exceeding $2,000, but what are some tips to help avoid problems or disputes with your customers?
 
First, write a contract for ANY amount. It is easier to write up the contract than it is to try and get paid for your work when there is a dispute over a verbal agreement.
 
Aside from the required dollar limits, you also need to provide several notices. These are the Information Notice to Property Owners About Construction Responsibilities, Information Notice to Owner About Construction Liens and the Consumer Protection Notice.
 
Contractors must retain proof of delivery of these notices. A simple way to do this is to place an acknowledgement for each in your contract with a place for the customer to initial by each notice that they have received and acknowledge being supplied the notices. This reduces the number of pieces of paper that you need to track and it will satisfy your proof of delivery. Consumers often don’t recall receiving the notices, so cover your bases and keep the proof of delivery.
 
Detail what work you are going to perform, the type or brand of material to be used, any deposit required and when payments are due to you. ALWAYS write a change order before deviating from the contract. You are inviting a dispute if you wait until the final payment to hand the customer a bill for items they changed but didn’t already sign off on through a change order.
 
I see contracts all the time that are only signed by one of the parties. Finish the paperwork and fully execute the contract.
 
You also need some important details such as who you are (use your name and address as it appears on your license), customer/homeowner and address need to be listed as well. Your license and phone number needs to be on all bid forms, contracts and change orders.
 
Be transparent and clear when detailing the scope of work and stick to it. A high percentage of disputes arise from poor paperwork and you are putting yourself at risk when the property owner is unhappy and your contract isn’t clear and concise.
 
You can also find a sample contract on our web site which gives you an idea of what the minimum contract requirements are. Here is a link to the sample to get you started: http://www.oregon.gov/CCB/Documents/pdf/Sample%20Contract%20for%20Construction%20Work.pdf
 

LICENSING

History lesson: Contractor regulation in Oregon

Licensing Manager Laurie Hall
1971: The “Builders Board” is established within the Department of Commerce to regulate residential home builders. The license fee: $20 per year.
 
1987: The Builders Board becomes an independent agency with responsibility for the Landscape Contractors Board.
 
1988: The Builders Board moves to the Veterans Affairs Building on the Capitol Mall in Salem.
 
1989: The Oregon Legislature creates the Construction Contractors Board (CCB), expands regulation to include commercial contractors. “Builders” become “contractors.”
 
1992: Sixteen hours of education required for all licensees who register on or after July 1, 1990.
 
1995: The maximum CCB penalty for violating contractor law increases from $1,000 to $5,000.
 
1996: Lead-paint regulations come into play.
 
1997: Legislation requires the CCB to certify residential home inspectors.
 
1999: Public can see contractor registration information on CCB website.
 
2000: “Registration” changed to “license.”
Also:
  • All new license applicants must pass exam based on the 16-hour pre-license course
  • CCB forms a Special Investigations Unit to pursue  construction-related crimes (raising the possibility of jail or prison time vs. just civil penalties)
2001: All businesses licensed after July 1, 2000, must have an owner or employee who has completed the pre-license class and exam.
 
2002: All businesses that have changed their entity type must obtain a new license. 
Also:
  • The Landscape Contractors Board becomes a separate, semi-independent agency.
  • Contractors can convert to “inactive” status and won’t have to carry a bond or insurance.
 
2004: CCB licenses developers.
 
2005: The Legislature defines Responsible Managing Individual  (RMI) as an owner or an employee of the business with controlling interest in a business.
 
2007: Licensees who let their license lapse for 24 months or longer must apply for a new license.
 
2008: CCB adopts the “endorsement” system for identifying contractor license types. 
Also:
  • “Personal election” workers compensation coverage is required for all exempt commercial contractors.
  • Chimney cleaning or servicing businesses must be licensed with the CCB.
 
2010: Contractors renovating homes or child-occupied facilities built prior to 1978 must obtain a lead-based paint renovator’s license from the CCB.
Also:
  • Commercial contractors now subject to continuing education requirements.
  • Locksmiths must be certified with CCB.
  • Application/renewal (two-year) fees increased from $260 to the present $325.
 
2011: Residential contractors must complete 16 hours of continuing education; required to take building exterior shell,  building codes, CCB-developed regulatory courses, and electives.
 
2013: Online license renewals available for most licensees. Today, 60 percent of licensees renew online.
 
2014: Residential continuing education requirements reduced to eight hours for contractors licensed six years or more. The CCB must approve all education providers and courses.  Also:
  • CCB adds four new restricted residential license endorsements: Residential Locksmith Services Contractor; Home Inspector Services Contractor; Home Services Contractor; Home Energy Performance Score Contractor.
  • Contractors using “leased” workers are now nonexempt, and must provide the leasing agency’s workers’ compensation information to CCB.
  • Handyman exemption from licensure raised from $500 to $1,000.
 
2015: CCB moves to a new location in downtown Salem, 201 High St. SE.
 
 

RESOURCES

Career Fair: The Department of Consumer and Business Services is hosting a career fair from 11 a.m. to 3 p.m. Jan. 13 at the Labor and Industries Building in Salem. Learn more at http://www.cbs.state.or.us/dir/CareerFair/index.html.
 
IRS Small Business and Self-Employed Tax Center: One of the best ways to get tax information is to visit https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Small-Business-and-Self-Employed-Tax-Center-1.
 
A tax tip:
The IRS has simplified the paperwork and recordkeeping requirements for small businesses by raising from $500 to $2,500 the safe harbor threshold for deducting certain capital items.
 
 
 

Oregon Sick Time

What is Oregon Sick Time?
Beginning Janury 1, 2016, all employers with 10 or more employees in Oregon (six in Portland) must provide up to 40 hours of paid leave per year.  Employers with less than 10 employees (less than six in Portland) must provide 40 hours of unpaid protected sick time.
 
How does Oregon Sick Time accrue?
Employees accrue 1 hour of sick time for every 30 hours worked or 1-1/3 hours for every 40 hours worked.
 
When are employees eligible to take Oregon Sick Time?
Employees are eligible for Oregon Sick Time on their 91st day of employment.
 
What if I have 11 employees but only for a short period of time as seasonal employees?
For counting purposes, all employees (full-time, part-time, and temporary) will be looked at for determining the number of employees. The number of employees is calculated based on the number of employees an employer has per day during each of 20 workweeks in the calendar or fiscal year immediately preceding the year in which an employee’s sick time is to be taken.
 
What is meant by a year?  How is it measured?
“Year” includes any consecutive 12-month period, such as a calendar year, a tax year, a fiscal year, a contract year or the 12-month period beginning on the anniversary of the date of employment.
 
How much is an employee paid for Oregon Sick Time?
Their regular rate of pay.  If an employee is paid on a commission or piece-rate, the employee needs to be paid at least Oregon minimum wage.
 
Does an employer have to pay sick time out when an employee leaves employment?
No.  The statute is specific.  An employer does not have to pay out for accrued unused sick time.
 
What if an employer has an existing sick time or PTO?
If this plan is, “substantially equivalent” or more generous to the employee than the minimums of the law, this policy shall be deemed, “in compliance.”
 
From the Oregon Bureau of Labor website. Learn more at http://www.oregon.gov/BOLI/WHD/OST/Pages/index.aspx


Don’t miss your chance to get health insurance

You only have a few days left to sign up for health insurance through HealthCare.gov. The last day to sign up, renew, or change plans for 2016 is Jan. 31, 2016.
 
If you don’t get covered before the deadline, you could go a year without insurance. You could also pay a significant penalty when you file your 2016 taxes. The penalty for not having insurance in 2016 is the higher of these two numbers: 2.5 percent of your yearly household income or $695 for every adult in your family plus $347.50 for every child under 18.
 
If you already have health insurance, this is your last chance to change plans. You might be able to find a plan that better matches your needs and budget on HealthCare.gov. Last year, consumers who shopped and switched plans saved nearly $400.
 
Financial help is available for many people if they enroll through HealthCare.gov. Depending on your income, you may qualify for tax credits to help pay your monthly premium and/or help with out-of-pocket costs such as deductibles and co-pays. 3 out of 4 Oregonians who used HealthCare.gov last year received tax credits averaging $199 per month.
 
Oregon has a network of certified insurance agents and community organizations ready to help you enroll, free of charge. Click here to find someone in your area or call 1-855-268-3767 (toll-free).
 
Oregon also has 24 drop-in enrollment centers where you can get free help in-person. The enrollment centers will be open through Jan. 31. Find one near you.
 
To start shopping for plans, visit HealthCare.gov or call 1-800-318-2596 (toll-free) (TTY: 1-855-889-4325).
 
 

Temporary asbestos rules

From the Department of Environmental Quality (DEQ)
 
DEQ has adopted temporary rules that require an asbestos survey be completed prior to demolition of residential properties. Here is information about the temporary rules:
 
A survey must be conducted before demolishing any residence that was constructed before Jan. 1, 2004.
A copy of the survey must be kept on site and provided to DEQ upon request.
A survey is not required if all of the material will be handled and disposed of as asbestos- containing material.
DEQ can grant a waiver of the survey requirement if requested in writing and documentation proves to our satisfaction that there is no asbestos-containing material present.
The temporary rules became effective Jan. 1, 2016.
Public hearings for the permanent rules are being held on Jan. 19, 2016 at the HQ, Salem, Coos Bay, Medford, Bend and Pendleton Offices. The hearing notice is available on DEQ’s website.

Non-residential buildings have always required a survey and this requirement has not changed for non-residential structures.
 
If you have questions, you can find information on DEQ’s asbestos webpage http://www.deq.state.or.us/aq/asbestos/index.htm.

You may also contact the DEQ office nearest you:
Clackamas, Clatsop, Columbia, Multnomah, Tillamook and Washington counties, call the Northwest Region – Portland Office to contact Susan Farland at 503-229-5982 or 800-452-4011.

Benton, Lincoln, Linn, Marion, Polk and Yamhill counties, call the Western Region – Salem Office to contact Dottie Boyd at 503-378-5086 or 800-349-7677.

Jackson, Josephine and Eastern Douglas counties, call the Western Region – Medford Office to contact Steven Croucher at 541-776-6107 or 877-823-3216.

Coos, Curry and Western Douglas counties, call the Western Region – Coos Bay Office to contact Martin Abts at 541-269-2721, ext. 222.

Crook, Deschutes, Harney, Hood River, Jefferson, Klamath, Lake, Sherman and Wasco counties, call the Eastern Region – Bend Office to contact Frank Messina at 541-633-2019 or 866-863-6668.

Baker, Gilliam, Grant, Malheur, Morrow, Umatilla, Union, Wallowa and Wheeler counties, call the Eastern Region – Pendleton Office to contact Tom Hack at 541-278-4626 or 800-304-3513.

Lane County, call the Lane Regional Air Protection Agency at 541-736-1056
 

CCB NUMBERS TO KNOW

Average per month
6,894: Phone calls
1,270: Renewals processed
9,261: Documents mailed
3,816: Insurance documents processed
1,213: Bond documents processed
 
Least busy day? Friday
 
 

EDUCATION & OUTREACH

CCB Live Classes
In 2016, the CCB will hold three-hour classes in Salem on Feb. 17, June 2, and Nov. 3. All Salem classes start at 9 a.m., will be held at CCB offices at 201 High St. SE, and require registration. You can register online by going to our home page: www.oregon.gov/ccb. If you have questions, call 503-934-2227.
 
Visit www.oregon.gov/CCB/Pages/ccbclasses.aspx we will soon announce dates for the live CCB classes we will hold outside Salem in spring 2016.
 
The CCB will also offer a three-hour class as part of the Home Builders Association (HBA) BuildRight conference April 20-21. Register with the HBA. 
 
Online classes
Most contractors take the CCB classes online. You must log into your account to take these classes. If you need to create an account, select the orange “Register” button.
 
Stormwater management summit
The Mid-Willamette Outreach Group sponsors this one-day training on Jan. 26 in Keizer on the topics of construction erosion prevention, stormwater facility design standards, and operation/maintenance of public stormwater facilities. Contractors can get six hours of Series B continuing education credit.  Learn more at http://www.cityofsalem.net/erosionsummit.
 
Recent news releases
Patrick Scott Cartwright, 47, will spend five years in prison for stealing money from a Lane County homeowner who hired him through a church friend for a construction project.
 
James E. Gabriel, an unlicensed construction contractor doing business as Florence Hearth and Patio, must make nearly $18,000 in restitution to four clients and shut down his business for repeated violations of construction contracting law and court-approved agreements.
 
The Construction Contractors Board (CCB) fined a Washington-based business $5,000 for working without a license while building a single-family tree house in a Sitka spruce in Neskowin.
 
A con artist is now serving 2 ½ years in prison after pleading no contest to stealing a legitimate construction contractor’s business name and license number. Gerald James Borton, 41, of Gresham, allegedly used the information to bilk unsuspecting customers out of thousands of dollars.
 
 
 
 

Mentoring, marketing, managing money…

Our second visit with the contractor we’re following through his first year

Three months after we first spoke with Tylor Stone, the painting contractor who is just starting his business, we meet again, this time in a Corvallis paint store. As it rains, Tylor and his mentor, Travis Wagar, contemplate the approach of winter.
 
Winter, in fact, is a big reason Travis offers to help new painters make it on their own.
 
“The nature of painting is you have to lay off people in the wintertime even if you had a great summer,” he said.
 
So he encourages employees with an affinity for painting to be their own boss. Both he and Tylor say learning the painting trade is relatively straightforward. But knowing how to run a business is something else altogether.
 
From the mentor perspective: “Half of it, I think…is figuring out whether that person has what’s necessary to be a business owner,” Travis said.
 
Tylor already realizes that it isn’t the craft that makes the business owner as much as “the mindset of how you go about making money.” In the first month, he called Travis multiple times a day.
 
“And half those calls was me telling him you’re not an employee anymore,” Travis says. “Just think like a business owner. And then the answer came…”
 
“That was always the answer…” Tylor agrees.
 
Bidding
Early on, Tylor asked lots of questions about pricing. Once he panicked, and tossed out a number to a client only to hear from Travis “Never give a price on the spot.”
 
In contrast to mathematical formulas (square feet times a number), Travis’ system is more “home-brewed but strangely more accurate,” Tylor said. “You look at the room and think, ‘this many gallons,’” Tylor said.
 
While “a little more empowering” than math equations, this system comes with experience, he concluded.
 
Of course, educating homeowners about the bid is as important as selecting paint. Travis and Tylor not only tell clients what’s in the bid, they tell them what’s not. So when a recent client said to Tylor, “You’re going to do the baseboards, too, right?” he directed them to his written bid. It said “This bid does not reflect any baseboards.” That would have been days’ worth of additional of work.
When Tylor presents a bid, he explains to homeowners that it is based on two coats of paint. He describes the grade of his paint.  And, he sticks to his guns about his pricing and the type of painter he wants to be. That’s the case even when it’s a Friday, he has no jobs lined up for Monday and a prospective client is pushing back on his hourly rate. “Is it, like, $10 an hour?” the man suggests.
 
You can find that price, Travis notes, “but I’m more.”
 
“You have to know who you are,” he says.
 
Problems with a job typically arise because of unreasonable timeframes or lack of information, Travis said. So, he puts plenty of time into a bid. If there is anything that’s unclear, the benefit of the doubt goes to the homeowner, Travis says. “Of course, it should.”
 
Clients often thank him for the detailed contract, “and the fact that you called me back.”
 
Travis makes sure clients understand that when they get a bid (even though his software program says “estimate”), it’s a number they can count on. “If I’m short on product because of my bad bidding, that’s on me.”
 
Tylor said that despite his fears he would need a law degree to generate a detailed bid and contract, he has found products online that work.
 
Client Relations
As word-of-mouth painters, client relations are key. So, if a client needs a change order, be reasonable, Travis says. He looks for a way to do something free for each of his clients, a tip he picked up years ago from another contractor. It might be 30 minutes of something he knows how to do but they don’t – fixing a cabinet door, for example.
 
Reading people can be as important as sizing up a job for a bid. Tylor is also learning to say “no,” tactfully. Customers who insist they need you in two weeks or appear high maintenance may not be the best to take on, especially if you’re already busy.
 
“It has to do with reading the market,” Travis says. Several lower-maintenance jobs will generate the same amount of money, perhaps in less time.
 
“Every time my gut said ‘no, I shouldn’t do this’ and I did it, I paid for it,” he added.
 
Marketing
Let’s say your current job ends Friday, then there’s a weekend, then…nothing. “It’s basically like you have a job but you’re going to be fired in four days,” as Tylor puts it. So, what do you do? His goal to get jobs word of mouth, and that means no large advertising budget.
 
First, you deal with anxiety, something Travis recalls vividly. “It took me about four years to have that oh-no-what’s-going-to-happen-next-feeling go away.
 
On the other hand, he told Tylor, “It doesn’t actually help at all to be anxious so don’t do it…It will actually mess with your motivation for that day.”
 
Instead, they plotted out how much Tylor has saved, and his personal and business expenses. From there, Travis could map out a worse-case scenario. Some other strategies:
 
Stop for Tyvek: When Tylor sees Tyvek, the sign of a project under construction, he might turn his car around, shake someone’s hand and leave his business card.
 
Build relationships: He’s already developing some repeat customers, including a property management company. That came about because “my wife, unbeknownst to me, put my ad on Craigslist.” She included his CCB number, which is required for any contractor who is advertising. As it turned out, the client called, in part, because Tylor holds a license.
 
Work with your retailer. Tylor lives 50 minutes from Miller’s Paint but he makes the drive to a particular store in Corvallis. Retailers not only give customers a list of painters they recommend but Travis encourages Tylor to learn everything he can about the paint to further his expertise. “Talk to the people who actually know the chemistry,” he says. “Get to know your product.”
 
Network with contractors: If you start referring your clients to other contractors for other types of work, they do the same back. “And if you do a good job in the midst of that, then people are happy all around and then you create a mini community of networking,” Tylor said.
 
Managing money
How do you handle the ebb and flow of money – from occasional big check to gaps between checks?
 
Manila envelopes. Tylor has one for each month. Inside each, are that month’s bills for the household and the business. Everything from “eating out” to “cell phone bill” has an envelope. When he gets a chunk of money, wife Joelle pays bills – envelope by envelope. At a glance, he can see when he must have the next job. Come summer, it’s just possible he’ll fill a year’s worth of envelopes. “The way my wife and I do finances now is way more awesome and way more oriented around managing freedom and time,” he said.
 
Recordkeeping
Taxes are unfamiliar territory so Tylor will follow in Travis’ footsteps and pay an accountant an hourly rate to help him understand the Form 1040 (Schedule C) that he’ll use to report income as a sole proprietor, and how to keep records. 
 
Travis typically talks to his accountant twice a year now – once to prepare for getting tax information together and once when he drops off his information. He said an initial meeting to understand the form is well worth the money.
 
Meanwhile, no more crumbling and tossing receipts. Tylor keeps everything together in one spot. And, it’s easy to keep receipts these days when he can put business expenses on a credit card, Miller Paint keeps a digital copy of everything he buys and most retailers will email receipts.
 
Conclusion
Tylor still marvels at having a mentor who genuinely wants to help him get a start in business and has willingly fielded questions ranging from the quality of tape to use on a trim job to the proper bid on a job. “He’s been super helpful,” he says.
 

**Tylor update**

Nearly three months since we first met Tylor, what has changed on the business side?
 
Tylor found a new insurance agent. He wanted someone local who would talk him through the “confusing world” of insurance. Changing insurance agents isn’t very complicated, he said, and his new agent in Corvallis was happy to explain the ropes.
 
Changed license endorsement. Tylor changed his license endorsement from a limited residential contractor, which limited the amount he could earn per year and per job. He is now a specialty contractor. This is a typical endorsement for many painters, roofers and other contractors who specialize in a trade as opposed to working as a builder or general contractor. Lesson: Tylor learned that to change his endorsement with the CCB, he needed to fill out a form and pay $20.
 
Wife Joelle joins the business: She quit her job and now supports his business administratively at home fulltime. “I couldn’t do it without her,” Tylor said.
 
 

Civil Penalties

October 1, 2015 - December 31, 2015